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Open a Limited company


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Hello, 

I am starting my journey into property development and after reading a lot of articles I have decided to open a limited company from where I will run all my property business, which will be mainly but to let properties.

I would like to ask if somebody knows what kind of Limited company is the best to open? Limited by shares or limited by guarantees?

And also if anybody would be likely to share a sample of memorandum and Articles of Association? or any tips on what to put in them? any specific terms, etc.

Appreciate any help. Thank you 

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Limited by shares is normal for a profit making company. Limited by guarantee is normally considered most suitable for charities or other non-profits. I'm not sure if it's expressly prohibited for a limited by guarantee company to make profit but limited by shares means you can take a dividend every quarter.

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Limited by shares is the normal way to set up a Property Investment company. When you set the company up you can use the standard Memorandum and Articles of Association offered by companies house. If you are just doing buy to let property, then the SIC code you will need to use is 68209 (buying and Letting out of own Real Estate)

Jagrup Lewis
Accountant & Client Manager

https://propertyhub.net/service/tax/

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We can only give general information on a public forum, and nothing in this post should be interpreted as advice. To speak to us about becoming a client and receiving bespoke advice, call us on 020 3936 2170 or email tax@propertyhub.net

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One other suggestion is to have £100 share capital rather than £1 share capital, the reason being that using £100 share capital is much more flexible, if you want to give some shares away to a family member, for example.

Breaking this down further,  if relevant, family members could get a special class of non-voting shares which allows wealth to be passed down to future generations with potential inheritance tax advantages, without disrupting the operation of the company. This would, however, need changes to the typical Memorandum and articles of association, so you would need a solicitor or other professional to help you out with that.

 Finally, if you are using a limited company, a very effective way of putting funds into the company is to create a loan agreement between yourself and the limited company, for example to fund the first deposit. Any loans made this way can come back from the company at some point in the future tax-free as they are simply repayment of the loans. This is a much better way of funding the limited company to make property purchases  than paying a massive amount of initial capital. As mentioned above, the initial capital could be say, £100. 

Hope this helps 

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